Regulators Propose Long-Term Debt Requirements for Large Banks
Yesterday, federal banking regulators introduced a proposed rule on long-term debt requirements for banks with assets exceeding $100 billion. Under the proposed rule, these banks must maintain a minimum amount of eligible long-term debt, which should be at least 6% of their total risk-weighted assets, 2.5% of their total leverage exposure (if they need to meet a minimum supplementary leverage ratio), or 3.5% of their average total consolidated assets, whichever is greater. Banks will have three years to comply, with partial compliance phased in during this period.
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FDIC Advances Key Banking Policy Changes
The long-term debt requirement proposal was one of several policy changes voted on at yesterday's Federal Deposit Insurance Corporation (FDIC) Board of Directors meeting. The board also advanced plans to impose specific criteria for resolution plans on banks with assets exceeding $100 billion and introduced new regulations mandating increased information filing from banks with assets over $50 billion. In addition, the FDIC voted to establish a more structured approach for managing receiverships concerning institutions with assets over $50 billion. However, the board did not reach a consensus on requiring board approval for the sale of failed mid-sized and large banks.
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